24-05-2007
Late-paying customers threaten businesses
Late payment can be a major problem for businesses, especially small firms which rely on a steady flow of money coming in to balance the books.
According to David Jones of credit lender Cattles Invoice Finance, many businesses are afraid to invoke their legal right to charge interest on late payments because they are afraid of damaging commercial relationships with their customers.
Mr Jones told the Yorkshire Post that building good relationships is "crucial" for business success, so it is hardly surprising that many small firms are afraid to demand interest. 
"It is proving to be a particular problem for smaller businesses," he revealed. "The legislation suits monopolies or very large firms but generally lacks the sensitivity and finesse that is needed to keep smaller business relationships intact.
"Late payment has been a problem for many years, with businesses experiencing reduced profit margins and working capital, plus higher levels of borrowing and, in some cases, business failure."
Invoice finance is one way to protect against the problem of late-paying customers. There are two kinds of invoice finance: Factoring and Invoice Discounting.
Businesses should also make sure they have appropriate
href="http://www.simplybusiness.co.uk/insurance">commercial insurance with additional protection against bad debt if required.
Find out about invoice finance